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Shareholder Loan Agreement Template for Indonesia

A legally binding agreement governed by Indonesian law that establishes the terms and conditions under which a shareholder provides a loan to their company. The document details the loan amount, interest rate, repayment terms, and other key provisions in compliance with Indonesian corporate and banking regulations. It includes specific provisions required under Indonesian law, such as language requirements and possible notarization, while addressing both domestic and international shareholder lending scenarios. The agreement ensures protection for both the lending shareholder and the borrowing company while maintaining compliance with Indonesian investment and financial services regulations.

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What is a Shareholder Loan Agreement?

The Shareholder Loan Agreement is a crucial financing instrument in Indonesian corporate practice, commonly used when companies require additional funding from their shareholders rather than external financial institutions. This document is particularly relevant in situations where traditional bank financing may be less favorable or unavailable, or when shareholders wish to maintain greater control over the company's debt structure. The agreement must comply with Indonesian law, particularly Law No. 40 of 2007 on Limited Liability Companies and relevant financial regulations. It typically includes detailed provisions on loan terms, interest rates, repayment schedules, and security arrangements if applicable. The document is especially important for foreign investment scenarios, where international shareholders provide financing to Indonesian companies, requiring careful consideration of foreign exchange regulations and cross-border transaction requirements.

What sections should be included in a Shareholder Loan Agreement?

1. Parties: Identification of the shareholder-lender and the borrower company

2. Background: Context of the loan agreement, relationship between parties, and purpose of the loan

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the loan amount and its intended use

5. Interest Rate: Interest rate applicable to the loan and calculation method

6. Disbursement: Terms and conditions for disbursement of the loan

7. Repayment Terms: Schedule and method of repayment, including principal and interest

8. Representations and Warranties: Standard declarations by both parties regarding their capacity and authority

9. Covenants: Ongoing obligations of the borrower during the loan period

10. Events of Default: Circumstances constituting default and consequences

11. Remedies: Rights and remedies available to parties in case of default

12. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

13. Notices: Process and addresses for formal communications between parties

14. General Provisions: Standard boilerplate clauses including amendments, severability, and entire agreement

What sections are optional to include in a Shareholder Loan Agreement?

1. Security: Details of any security or collateral provided for the loan - include if loan is secured

2. Subordination: Provisions regarding ranking of the loan relative to other debt - include if there are other creditors

3. Currency and Exchange Rate: Provisions dealing with foreign exchange aspects - include for foreign currency loans

4. Tax Provisions: Detailed tax treatment and withholding requirements - include for cross-border loans

5. Conversion Rights: Terms for converting loan to equity - include if conversion features are desired

6. Registration Requirements: Provisions regarding regulatory registrations - include for foreign loans

7. Assignment: Terms for transferring loan rights - include if transfer rights are contemplated

What schedules should be included in a Shareholder Loan Agreement?

1. Repayment Schedule: Detailed schedule of repayment dates and amounts

2. Disbursement Requirements: List of conditions precedent and required documents for disbursement

3. Form of Disbursement Request: Standard form for requesting loan disbursements

4. Security Details: Details of any security or collateral (if applicable)

5. Calculation of Interest: Detailed methodology for interest calculation

6. Required Regulatory Approvals: List of necessary regulatory approvals and registrations

Authors

Alex Denne

Advisor @ GenieAI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

GenieAI

Cost

Free to use

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